Boston's plan to hike commercial property taxes fails

Boston Mayor Michelle Wu's proposal to temporarily increase commercial property taxes has failed after months of debate between lawmakers and business groups. 

Massachusetts Senate President Karen Spilka, an Ashland Democrat, announced late Monday that she won't bring the bill up for debate again amid concerns that adjustments to the city's tax system aren't as necessary as Wu has said. 

"I have heard clearly that there currently is not sufficient support for this proposal," Spilka said in a statement. 

Boston relies heavily on property tax revenue, making it particularly vulnerable to the nationwide slump in office demand. To avoid budget cuts and make up for an expected shortfall in commercial levies, Boston homeowners would have to shoulder a tax increase. Wu had proposed a workaround that would better balance that burden between residents and commercial properties. 

Wu says the average single-family homeowner will see a 10.5% increase in their annual tax bill compared with fiscal 2024. That compares with an average annual boost of 9% over the past five years. Her proposal would have reduced the increase in residential property tax bills to about 5%.

"This new understanding has left stakeholders and Senate members with serious concerns about the bill's impact on the competitiveness of the state as a whole," Spilka said. "Many in the Senate believe that this proposal tips the scales too far in one direction, with a stalled economic recovery in Boston as an unfortunate potential outcome."

While business coalitions had reached a deal with Wu in October that limited the commercial tax increases, they have since backtracked. Corporate leaders have said higher property taxes would deepen the pain for the commercial real estate market. Opponents of the bill have also said fiscal constraint needs to be a part of the city's approach to offset the impact of declining office building values. 

The bill has twice passed the Massachusetts House of Representatives but has repeatedly stalled in the Senate. Wu is running for reelection next year. She has previously said that Boston residents should blame the Senate for the increase in their taxes.